RESOLUTION
AUTHORIZING A SECTION 108 LOAN AGREEMENT WITH THE HOUSING AND REDEVELOPMENT
AUTHORITY OF DULUTH, MINNESOTA (HRA), THE DULUTH ECONOMIC DEVELOPMENT
AUTHORITY (DEDA) AND CENTRAL HILLSIDE LIMITED LIABILITY LIMITED
PARTNERSHIP (DEVELOPER) IN THE AMOUNT OF $594,000, CONTINGENT UPON
THE APPROVAL OF HUD AND DEDA.

BY
COUNCILOR GILBERT:

RESOLVED,
that the proper city officials are hereby authorized to enter into a Section
108 loan agreement, substantially in the form of that on file in the office
of the city clerk as Public Document No. __________ with HRA, DEDA
and the developer relating to acquisition of properties for the Fifth
Street redevelopment housing project in the amount of $594,000 payable
from Fund 262, said authorization is subject to HUD’s approval of
said redevelopment housing project and DEDA’s approval by resolution
of the Section 108 loan agreement.

STATEMENT
OF PURPOSE: This purpose of this resolution is to authorize
the issuance of a loan in the amount of $594,000 from the city’s
approved HUD Section 108 guaranteed loan allocation. The funds will be
used for property acquisition and demolition, public utility relocation,
and improvements to the adjacent alley, for the proposed Village Place
housing development located on the lower side of East Fifth Street between
Sixth and Seventh avenues East. The Duluth HRA is acquiring and improving
the site on behalf of the developer. Repayment of this loan will be made
by DEDA using uncommitted proceeds from TIF District 7.

DEDA
had committed $900,000 in MHFA funds to the acquisition and demolition
for the site assembly of the Village Place project. DEDA has already contributed
$450,000 from unspent MHFA funds towards this commitment. The other $450,000
of grant money did not materialize. Staff recommends fulfilling DEDA’s
commitment to the project. The additional cost of $150,000 is due to increased
acquisition and utility relocation costs.

This
authorization is subject to HUD’s approval of the redevelopment
project and DEDA’s approval of the agreement which is scheduled
on the February 7, 2005, DEDA agenda.